Cut taxes to allow return of Dominican capital

The tax agencies will submit a bill that allows the entrance of capitals that Dominicans hold abroad, by paying only a 1% tax instead of the current 25%.

Hacienda minister Vicente Bengoa and Internal Taxes director Juan Hernandez, made the announcement in a press conference yesterday, where they said the measure aims to make it easy for Dominicans to bring their capitals to invest them here and withdraw them from the international financial sector, where massive bankruptcies have occurred.

Bengoa clarified that the measure implies some conditions, such as that the funds must be deposited in foreign banks and not of doubtful origin, to keep the tax break from being used as a source of money laundering.

He said the suggestion responds to the interest by Dominican businesspersons who’ve expressed their desire to bring their capital abroad, but haven’t done so because of the high taxes they would have to pay.

The legislation would be submitted to Congress as soon as president Leonel Fernandez approves the suggestion.

Dominican Government submits to reduce taxes

The government submitted to the Senate to reduce taxes:

The first is to deduct all education expenses from income taxes if the students are nonworking minors; the second to lower from 5 percent to 0.5 percent the advance payment companies pay, and the third is to renegotiate mortgage loans with other banks without additional fees.

Hacienda minister Vicente Bengoa, Internal Taxes director Juan Hernandez, and the Presidency’s Legal advisor Abel Rodriguez del Orbe handed the bills to Senate president Reinaldo Pared, who said Congress will give them priority because they benefit the population.

Bengoa said the bills were the result of the dialogues held in the recent national summit and that measures are being adopted that merit Congressional approval.

He said the proposed legislation means a sacrifice of revenues for the government, which it will assume given the international recession and the country’s economic slowdown.
The official added that the measures give companies more liquidity and less need to dismiss more workers.

"For the country to fail the world would have to fail first,” says, Fernandez

President Leonel Fernandez said in the context of the global financial crisis, even in the worse case scenario, "for the country to fail the world would have to fail first.”

The chief executive said Dominican Republic’s challenge is to maintain economic growth with low inflation, and stability in the exchange rate and external accounts, and affirmed that the Government doesn’t plan to raise taxes.

He said it’s somewhat surprising that in last year’s fourth quarter, inflation was 4.5% from a projected 12%.

On the 2009 projections Fernandez said the Central bank projects a growth of three percent, compared with that of The Economist, which places it at a more moderate 1.0%.

Fernandez spoke on the topic Vision and priorities for the next five years, in the “Table of Businesses in the Dominican Republic, responding to the economic crisis global," organized by the The Economist Group, with the attendance of business leaders, specialists in international business and Government officials.

Dominican Republic remains in demand for tourism investors

As other hotel markets suffer, planned resorts indicate Dominican Republic remains desirable as Philadelphia-based AMResorts has announced that plans to develop two new luxury resorts at Cap Cana at a cost of US$200 million.

Located on the eastern tip of the Dominican Republic, Cap Cana is a new 30,000-acre Caribbean resort development endeavor. The master planned destination, dotted with premier golf courses, upscale retail options and other amenities, is on target to become home to the Caribbean's largest in-land marina for mega yachts.

AMResorts will build Zoëtry Pearl Sands Cap Cana and Pure Secrets at Cap Cana along beaches within close proximity to the Punta Cana International Airport. The lifestyle property Zoëtry Pearl Sands will, in addition to its upscale accommodations, feature restaurant and entertainment venues, as well as elements focused on feeding visitors' emotional and physical health.

Pure Secrets at Cap Cana will be designed specifically to accommodate adults and couples, and will offer entertainment options and a spa. Both resorts, which will target the affluent set in the U.S., are on schedule to open their doors in 2010.

Statistics reveal that the country's pipeline of ground-up new hotel construction, condo-hotels and real estate conversion projects consists of 16 projects with an aggregate 5,981 rooms.

In terms of Latin American countries with the most hotel construction activity, the Dominican Republic ranks fourth, trailing leader Brazil, followed by Mexico and Argentina.

Austria Development Bank announces soft, long-term financing for Dominican Republic

To provide a response to the need for funding of projects in developing countries such as Dominican Republic, Austria’s Development Bank, Oesterreichische (OeEB) Entwicklungsbank AG, partners with the private sector to develop businesses and an effective, properly working economy.

“Economies in many developing countries are growing vigorously. Yet large numbers of people there still live in great poverty. What they frequently lack is access to education, to employment and to modern infrastructure,” the enhtity says, citing research published by the OECD’s Development Assistance Committee (DAC). “An economy that is working properly is a crucial factor in fighting poverty.”

It notes that to allow the building and spreading of business expertise, only functioning cycles of economic processes and a prospering private sector create lasting employment and incomes.
“Austria wants to provide special support for the close partnering of business and development cooperation,” it says, for which its support is extended both to activities in Austria and in developing countries.

The OeEB’s says that as part of its government-appointed mission and expertise, its mandate is to facilitate and support private sector projects with development benefits and to effectively advance Austria’s goals for international development and foreign trade, and benefits from the international know-how of the OeKB Group.

The OeEB is a member of European Development Finance Institutions (EDFI), the network of bilateral European development banks, and supports the private sector in developing countries, on commercial terms. “As key criteria, projects must be commercially viable and create lasting benefits for regional economic development.”

The Austrian entity stresses that the market regions it serves are regarded as relatively risky by investors and suppliers. “As a result, tailored financing solutions for a wide range of long-term investments are typically not available in these countries through regular commercial channels, and its special mandate allows OeEB to accept higher of amount, tenor and country risk.”

As to its services the OeEB clarifies that it’s a complement to the respective offerings of the Austrian Development Cooperation of the Foreign Ministry, the Austrian Development Agency (ADA) and the Austrian Ministry of Finance, and can also support projects in countries for which no financing from Austrian partners has been possible in the past.

“The services of OeEB are both subsidiary and complementary to those of the commercial banking sector – in other words, OeEB products fill gaps between the products of the commercial banking sector,” it said, whereas to provide additional support to projects, funds from Austria’s federal budget are earmarked for so-called “Advisory Programs,” with funds aimed at concrete and targeted support for projects that boost development.